Small Businesses Embrace Search Engine Marketing

By Patricia Fusco | Posted June 25, 2003

Small businesses are quickly adopting the use of search engine advertising solutions, according to new research from The Kelsey Group and ConStat, co-sponsors of the ongoing Local Commerce Monitor study.

The findings of the sixth wave of the Local Commerce Monitor indicate that among small businesses that advertise, 17 percent utilize search engine keyword advertising and/or paid inclusion tactics in Internet search results as a means of reaching potential customers.

Neal Polachek, Kelsey Group senior vice president, said this places search in the seventh position among the advertising and promotion options being used by small businesses that advertise.

"While 77 percent of small-business advertisers utilize print and online Yellow Pages, the emergence of search in the small-business advertising mix may very well have an impact on the $25 billion global Yellow Pages industry," Polachek said.


On average, it takes up to 90 days to get a website listed in a search engine or online directory. Where small business websites are concerned, paid inclusion is often the most cost-effective way to make sure that your site is listed in a search engine within a few days. If you happen to run an e-commerce site, paid inclusion is just about the only way to get your site listed in major search engines and online directories.

Keyword advertising is a completely different way to increase the visibility of your website. Keywords are used by Web surfers to describe what they hope to find while performing an online search. Associating your website with specific keywords or phrases, by topic or location, allows you to put your message in front of people who are actively searching for goods or services you provide.

The study's findings indicate increased Internet savvy among small-business advertisers, as local businesses try to get their share of the rapidly growing number of local commercial searches being performed across numerous search platforms. Furthermore, nearly 50 percent of these same small businesses are now connecting to the Internet through some form of high-speed Internet connection. This reflects a 67 percent increase from just a year ago, according to Polachek.

"Historically, many have considered search advertising beyond the grasp of small businesses," said Bill Deaton, managing director of ConStat, a research firm based in San Francisco, Calif. "The new data suggests that it would be wise for local media players to seriously consider the fact that search is now clearly on the menu for small businesses that advertise."

Surprisingly, e-mail marketing is slow to erode direct mail campaigns by small- and medium-sized businesses. Polachek said businesses on the larger side of the scale — those with more than 50 employees — have embraced e-mail advertising, but that smaller firms have been slow on the uptake.

"For whatever reasons, smaller businesses seem to think that e-mail marketing is harder to execute," Polachek said. "While direct mail is more expensive and time consuming than e-mail marketing, smaller businesses seem to lack the resources to utilize e-mail as a marketing tool."

However, Polachek expects that e-mail marketing efforts by smaller businesses will continue to increase. When asked how important is was to be able to send e-mail marketing promotions to their customers, 62 percent of businesses with fewer than 20 employees said it was very important. This is up from 16 percent in last year's study.

Web banner advertising has remained steady since 1999, but still makes up only a small part of the advertising mix for SMBs. Polachek said that the shifts in small business advertising methods goes hand-in-hand with broadband adoption.

"In the second and third study, at the peak of the dot-com craze, small businesses wanted to compete with big businesses and market their goods and services worldwide," Polachek said. "It seems reality has settled in and small businesses have netted out the hype, using the Internet and high-speed connectivity to market their goods and services locally, not globally."

The Local Commerce Monitor is one of the first nationally scoped, quantitative research programs crafted to understand the attitudes and behaviors of America's small- and medium-sized businesses. The ongoing study, first implemented in 1999, represents findings across 14 primary and secondary U.S. markets, including Atlanta, Boston, Chicago, Columbus, Hartford, Houston, Los Angeles, Nashville, New York, Norfolk, Oklahoma City, Omaha, Sacramento and Seattle.

The Kelsey Group and ConStat will present detailed findings from the most recent edition of the Local Commerce Monitor at The Kelsey Group's Directory Driven Commerce Conference, July 21-23, in Denver, Colorado.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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